TreasureX Researchbis.wpThe Widening Web of Global Imbalances
Stefan Avdjiev, Kristin J Forbes, Tsvetelina Nenova, Marjorie Santos · September 23, 2026
Global imbalances — the gap between what countries owe the world and what the world owes them — have widened sharply again. A new Bank for International Settlements working paper by Stefan Avdjiev, Kristin J. Forbes, Tsvetelina Nenova and Marjorie Santos tracks the stock of these positions rather than just annual flows, using net international investment positions (NIIP). The picture: the United States' net foreign liability position has deteriorated markedly, while most other major economies have seen their NIIPs improve. In effect, the world's balance sheet is increasingly tilted toward US liabilities and everyone else's assets.
Why it matters: a large, persistent debtor position can make the US economy more sensitive to shifts in foreign appetite for its assets — changes in interest rates, exchange rates, or risk sentiment. The authors map out drivers and possible adjustment paths, warning that unwinding such imbalances is rarely smooth. For investors, this is a slow-moving but structural backdrop: it shapes long-run currency risk, the cost of US borrowing, and the durability of foreign demand for Treasuries and dollar assets. It also means diversification away from a single dominant reserve currency may stay a live theme.
Attribution: Based on a working paper from the Bank for International Settlements. Read the original: https://www.bis.org/publications/working-paper-1379-unraveling-cobweb-global-imbalances-drivers-vulnerabilities-and-adjustment-scenarios
Educational content only, generated with AI assistance from public research abstracts. Not investment advice.